Lean Diversification is a method for developing new income streams during the COVID-19 crisis. The Lean Diversification approach is rapid and low risk, both of which are essential in a crisis.
The idea of Lean Diversification is inspired by the ‘Lean Startup’ methodology that has been so successful for many new businesses in the digital economy, such as software and smartphone apps. However, the principles apply to any kind of business. And they are especially relevant for established businesses that want or need to develop new sources of income during the crisis.
Lean Diversification is a way to quickly test then rapidly develop new business ideas such as:
– New products or services for current customers
– Selling existing products/services to new market segments
– Selling online as a new venture
– Creating digital versions of products and services
– Adapting projects to deliver them online instead of offline
Key concepts involved in the ‘Lean Startup’ book by Eric Rees, which can be adopted for diversification projects include:
– Rapid testing and learning
– A radically different approach to conventional ‘research and development’
– Market research as an immediate and inexpensive alternative to traditional techniques
– “Build, measure, learn”
– Validation of a new product or service through customer interaction
– Adapt and adjust to achieve a “Product-Market Fit”
– Test key assumptions
– Prototyping creating imperfect versions of products and services to test the market
– The Minimum Viable Product (MVP) – a “good enough just to test the market” prototype.
– “Traction” – testing market engagement by measuring not only sales but also downloads, usage, sign-ups, upgrades etc
– The “Pivot” – changing direction of a product’s development in response to feedback from users/customers.
– Asking the question at critical stages: “Persevere, or pivot?”
– “Fail fast”